The Ultimate Guide to Warehouse Management 

For any e-commerce business or retailer that sells physical products, you will need a method of storing your inventory as well as a physical location. This will often be a fulfillment center, warehouse, or distribution center. 

It is essential that inventory is received, stored, and sent out as efficiently as possible. This is where warehouse management comes in. 

For your business to run smoothly, and the supply chain to work effectively from product receiving all the way through order fulfillment, a good warehouse management system should be in place. Warehouse management processes and operations can be the key to the success of your business.

What Is Warehouse Management?

Warehouse management encompasses all of the operations of a warehouse, which includes the following:

• Receiving inventory
• Tracking and monitoring inventory
• Picking and packing
• Managing shipping
• Staff training
• Workload planning
• Organizing warehouse space

Warehouse management is the set of policies and procedures involved in the day-to-day operations of a warehouse, including receiving goods, storing goods, tracking inventory movement, order fulfillment, and shipping.

How a Warehouse Management System Works

A WMS, or warehouse management system, is a type of software that provides tools for optimizing warehouse operations and processes. With a WMS, you can streamline warehouse operational processes, eliminate manual processes, and reduce the potential for errors or inefficiencies. 

A WMS can give you real-time inventory level visibility. This can allow you to monitor the day-to-day dealings of the warehouse, from storage to staff productivity, demand forecasting, and order fulfillment. 

Using a WMS can help you to see the big picture more clearly, helping you to recognize inefficiencies, track progress, pinpoint potential improvements, and optimize the retail supply chain. 

A warehouse management system can differ based on the type of business it is being used for. For example, a WMS will need to function differently for a brick-and-mortar retail store than it will for an e-commerce business that sells products directly to the consumer.

Important Warehouse Management Processes

Warehouse management is a critical part of the retail supply chain. It can impact inventory management, storage, shipping, distribution, and order fulfillment. This can play directly into customer satisfaction and your bottom line, as consumers expect fast and reliable delivery on their orders. A warehouse management solution can help you to track the movement of goods in real time, improving the efficiency of the retail supply chain. 

E-commerce continues to grow at rapid rates, as e-commerce sales in the United States hit $870 billion in 2021. The importance of managing inventory is more important than ever.

Inventory Tracking, Monitoring & Management

Inventory tracking and monitoring help you to know exactly what you have in stock in the warehouse and where it is. With a WMS, you can know exactly what SKUs you have in the warehouse, where they are located, and when levels hit a reorder point. 

It is important to keep the right amount of inventory in the warehouse. This should be enough to fulfill and keep up with demand, but not too much that will be costly to store when it is not moving as quickly.

Inventory management refers to the process that details the amount of product that is ready to be shipped when a customer places an order as well as demand forecasting based on projected volume that lets you know when to order more. As your business needs evolve, warehouse spacing can also change. Accurate tracking of inventory is essential to ensuring that this process is as cost-effective and efficient as possible.

Inventory Receiving

Warehouse management needs to be able to account for receiving inventory from trucks and storing it in the proper place. With a WMS, inventory is scanned as it is received from the loading dock and then scanned again when it is placed into the inventory storage location in the warehouse. 

This allows for real-time monitoring of inventory quantities as they change. When the product comes in and when it goes out, this should be updated automatically.

Picking & Packing of Inventory

When an order comes in, the inventory will need to be picked from its storage location. A warehouse management system will tell the picker exactly where the inventory is located and can generate pick lists to make item retrieval as efficient as possible. 

After being picked, the inventory will be passed to a packer that will ready the product for shipment. The product will be packed as needed, and a shipping label is generated to place on the package.

Shipping

A shipping carrier will pick up the packaged inventory based on your agreement with providers such as USPS, FedEx, UPS, or others. The packages are picked up at the warehouse and shipped to their next destination. 

Just like with order receiving, the WMS will update the inventory quantity automatically when the product leaves the warehouse. The WMS can also provide order tracking back to your store, so customers are able to easily track their orders.

Inventory Reporting

A WMS will provide inventory reports on a variety of warehouse processes to offer visibility into your inventory and order fulfillment process. These reports can help to show you where there could be room for improvement and how to increase efficiency. 

Inventory reports can be part of demand forecasting, which can help you to scale your inventory needs up and down to account for seasonality and to better understand staffing and labor needs. A WMS can also keep track of safety trainings and certifications to ensure that staff are properly trained to operate specialized equipment safely.

How Warehouse Management Benefits E-Commerce Businesses

With an e-commerce business, order fulfillment is key to customer satisfaction and therefore your bottom line. Warehouse management is critical for moving products through the retail supply chain smoothly and efficiently and for helping your business through growth and evolution by providing the proper oversight and processes. You need to be able to support your business needs today as well as any projected growth.

Improved Supply Chain Efficiency

With a comprehensive warehouse management system, you can ensure that packages are processed and shipped faster and that your order fulfillment process is as efficient as it can be. Warehouse operations — from inventory receiving to picking and packing to shipping — can all be optimized through effective warehouse management. This keeps product moving quickly through the retail supply chain all the way through to order fulfillment.

Enables Logistical Growth

As a business grows, there can be new considerations involved with fulfillment logistics. It is important to have the right-sized warehouse for your business needs, for instance — one that will hold your inventory now but also be a space that you are not going to immediately outgrow. A WMS can help to enhance warehouse efficiencies while accounting for growth as well.

Optimized Storage Allocation

Warehouse management will store each SKU in its own dedicated storage space in the warehouse, whether that be a bin, shelf, or pallet. The WMS details the exact location of each SKU, making for easy item retrieval during picking. The WMS will also provide real-time data on inventory levels, helping to prevent stockouts and ensuring that you always have the correct amount of space.

What to Consider When Choosing a Warehouse Management System

The warehouse management system you choose needs to suit your business needs, and you have plenty of options from which to choose. Each WMS can have different functionality, and one will likely be better than another for your e-commerce business. 

For example, when choosing a WMS, be sure to choose software that is going to be compatible with your warehouse equipment. This includes your inventory scanners, scales, labels and printers, wearable or handheld devices, terminals, and all physical hardware and equipment that you use.

The WMS software will also need to be able to connect to your store. It will need to be integrated into your online store to ensure that you can keep promises to customers, such as delivering on expedited shipping.

When deciding on a WMS, it is also important to choose one that has a demonstrated positive impact on ROI (return on investment). You are going to have to buy into a WMS, and it should be saving you money and time, and improving accuracy to make it worth your investment. A good WMS can increase order processing and save you money in the long run.

Advantages of Using a 3PL for Warehouse Management 

Warehouse management and order fulfillment are often outsourced to a 3PL, which will often already have efficient warehouse management processes in place. A 3PL will run their own fulfillment centers and take care of the day-to-day warehouse operations. 

These are some of the benefits of working with a 3PL for warehouse management instead of trying to do it all yourself:

• Inventory can be distributed among several fulfillment centers to optimize shipping costs and speeds.
• Logistics are optimized, as 3PLs work with many companies and therefore can continuously aggregate data to enhance warehouse and fulfillment processes.
• A lot of time is saved, as order fulfillment represents some of the most time-consuming logistical tasks in the retail supply chain and a 3PL can manage these tasks for you.
• Inventory visibility is improved, as you gain insights in real time even without needing to be inside the warehouse.

A 3PL can take on the inbound and outbound logistics of order fulfillment for your business, offering you peace of mind as well as the ability to see exactly what is happening with your inventory.

References

E-Commerce Sales Grew 50% to $870 Billion During the Pandemic. (February 2022). Forbes.